Q4 2021 AVITA Medical Inc Earnings Call

[music].

Yeah.

Ladies and gents.

Thank you for standing by and welcome to the BD Medical Inc. Fourth quarter 2021 earnings Conference call.

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I would now like to hand, the conference over to your speaker for today prolong corner you may begin.

Yes.

Gentlemen, thank you operator, welcome to our beta medical fiscal fourth quarter and full year 2021 earnings call. Joining me on today's call are Mike Perry, President and Chief Executive Officer, and Michael hold our Chief Financial Officer.

This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

All statements made on this call that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the markets in which our BD operates trends and expectations for VITAS products and technology trends and demand for VITAS products have you just expected financial performance expenses and position in the market and the impact of Covid.

19 on the VITAS operations and have leaders customers operations. These statements are neither promises nor guarantees and involve known and unknown known risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements. Please review of beat his most recent.

As with the SEC, particularly the risk factors described in it because F. Three and 10-K filings and then <unk> quarterly report on Form 10-Q for the fourth quarter ended June 32021 for additional information any forward looking statements provided during this call including projections for future performance are based on management's expectations out.

As of today.

<unk> undertakes no obligation to update these statements except as required by applicable law.

This press release with fourth quarter and full year 2021 results is available on our website www Dot Davita medical Dot com under the investors section, there's additional about <unk> financial results.

<unk> website also has the latest SEC filings, which you are encouraged to review a recording of today's call will be available on <unk> website by five P. M. Pacific time today, now I would like to turn the call over to Mike for his comments and fourth quarter of 2021 business highlights.

Thank you Caroline and thank you everyone for joining.

Us today.

We made strong progress on our growth objectives in the fourth quarter.

As you know from our pre release in June commercial revenues, not including BARDA related revenues were strengthened substantially in the quarter up 45% quarter over quarter, reflecting reopening.

<unk> of parts of the economy, which led to a corresponding increase in accidents as well as continued penetration into our burn center accounts as we began to see some improved access to hospitals and increased procedures.

While it would be premature to say that the pandemic is behind us, especially.

Especially given the recent developments with the Delta variant we are encouraged by our recent commercial performance I remain extremely excited about the opportunities ahead with our pipeline indications here.

Here at Davita, we are driven by our primary goal of commercializing our proprietary technology to enable.

Health care providers to successfully address skin defects to save lives and improve quality of life for our patients.

As we grow from treating burns to trauma to vitiligo to cell and gene therapy and to aesthetics and beyond our focus is on delivering leading edge.

<unk> therapeutic skin restoration solutions to our patients.

While the company was founded with burn treatments in mind, our team is working to leverage our point of care autologous spray on skin platform across many markets and indications and I am very pleased to update you today on our latest.

<unk> developments with that I'd like to turn now to our Burns business as a quick update on the product development front here.

At the end of June we submitted to the FDA PMA supplement for our new version of the resell device with enhanced ease of use.

We anticipate FDA approval in the first half of calendar 2022, and commercial launch thereafter.

In our fiscal fourth quarter, we saw Covid abating in many geographies, which led to various degrees of economic and social recoveries, which in turn resulted in a corresponding increase.

Recent accidents, our sales team was able to regain some momentum with our customers, which is reflected in our revenue results I'm very proud to report that our resale commercial revenues were a record $6.7 million in the fiscal fourth quarter compared to four.

$6 million in the previous quarter ended March 2021.

We realized a significant revenue growth primarily from the increase in burn cases, but also from our commercial teams further penetration and burn center accounts, our organization remains well positioned to respond.

Bond and quickly pivot to changes in burn related accidents, we have been building our burns focused salesforce for over two and a half years and believe we have the largest and most experienced burns dedicated sales force in the market.

In the quarter, we saw increased penetration into accounts and proceed.

Procedure spanning all burn sizes, including smaller Burns, which has been our focus of late approximately 80% of our burn cases come from these smaller wounds are wounds comprising less than 30% TBS say, where total body surface area.

We ended fiscal two.

2021 with over 100 hospital accounts with the estimating that there are 136 burn centers in the United States and I believe and as.

As we've mentioned previously we feel that we have established a solid footprint in burn center hospitals.

Our focus is now on driving utilization and broadening penetration within this footprint.

We believe our recent sales performance illustrates success with implementing this plan rep.

Revenue from our top 20 accounts increased approximately 25% in fiscal Q4 over.

Q3, demonstrating strong growth if we look back a year ago. Our top 20 accounts were contributing 66% of our burn revenue today with a much larger revenue base. Our top 20 accounts are delivering just over 40% of revenue reflecting.

<unk> across a broader base of burn centers with over 50% of burn surgeons using resell in the quarter and over 80% of the approximately 300 U S. Burn surgeons trained to use the resale system. We have indeed establish a broad user base as we.

We look ahead, our sales force will be focusing primarily on driving and expanding usage and adding surgeon users within our existing accounts.

The Delta variant spreads we are seeing increased access restrictions and we anticipate a potential impact on the.

Availability of burn beds, particularly in the south.

Of note data from an Eva sponsored series of surveys between April through August of 2020 showed that up 2082 burn beds identified in the United States only 845 beds.

Or 40% were available in April of 2020, and Amir 572 burn beds or 27% were available in August of 2020.

The impact we saw last year during the Covid peak did influence our sales and while we don't currently.

Currently think the Delta variant will be nearly as disruptive and we are not currently seeing an impact on burn bed availability, we are prepared to pivot and deploy our learnings from the prior waves of Covid moving forward, we continue to leverage our sales forces deeper.

Deep relationships and experience our training capabilities physician engagement programs and new outreach efforts to educate and engage burn care providers today. Our sales force is able to access most accounts to support cases, and aftercare and to perform training.

Training.

During the fourth quarter, we saw a substantial traction in small off site of EDA events and these live sessions drove physician understanding of incorporation of resell into their daily practice and correspondingly our revenue increase.

This summer has been.

Been slow in terms of professional meetings due to the pandemic status and the impassioned restart of vacations, yet we expect resumption of regional meetings in the fall.

While meetings and conferences are currently planned to be in person. They may change to a virtual as a result of the spreading.

Delta variant Fortunately enthusiasm from physicians has been very high and we have been successful in the past at a definitely pivoting to virtual meetings. So.

We will continue to be flexible as necessary with our participation at meetings and with our physicians.

<unk> interactions.

With our recent label expansion to treat full thickness thermal burns and patients one month of age and older in July we rolled out a campaign targeting pediatric burn treatment.

As you May know unfortunately, nearly a quarter of all burn.

<unk> cases in the United States occur in children under 16 years of age one of the main goals within the burn community in here at Aviva is to avoid painful surgeries scarring and multiple grafting procedures from analysis of our continued access and compassionate use data resell.

<unk> significantly reduced the mean number of pediatric grafting procedures compared to national burn repository data.

Our results showed one six grafting procedures using resell in combination with grafts versus three six procedures using conventional.

Resells that thickness skin grafts, which is a very compelling improvement given the pain and scars that patient's endure.

While we do not expect the pediatric label expansion to move the needle significantly on our topline revenue in the near term. We can now engage burn centers that are pediatric.

Split the only facilities and we are now providing a comprehensive commercial effort that is able to address the vast majority of burn patients.

Our commercial team is finding that our new label is reinvigorating conversations for example, after an extended sales effort UC Davis one.

One of the largest U S burn centers recently added resell to their formulary driven in part by the new expanded label.

You may have seen a recent news report in late July in Yonkers, New York of our mother and child being hit by an alleged drunk driver.

The.

Child was pinned under car and was severely burned.

I'm very pleased to tell you that resell was used successfully to help that child.

And seeing these heartbreaking cases, it is truly a privilege to be in a position to make a meaningful difference in the lives of these children.

And their families.

Another area of important impact for us is the subject of injuries not originating from burns.

The reopening of the economy and the corresponding increase in accidents meant that in the fourth quarter enrollment in our soft tissue reconstruction trials access.

<unk>.

As a reminder, this trial involves non burn wounds, such as those with necrotizing soft tissue infections, and the gloving injuries, which are wounds that commonly present at the same trauma centers. We are where we are currently serving our burn patients.

If you recall.

Call, we had our first patient in this pivotal trial enroll in March 2020, and we saw slow enrollment for the first year due to the patent demick.

We have 17 participating sites with 32 subjects enrolled and treated as of June 30th over the last two quarters, we have.

Patient enrollment ticking upwards for instance during July eight additional patients were enrolled three patients have been recruited so far in August and our goal is to complete recruitment of all 65 patients by late 2022 with a six month follow up for patients in.

This trial, we are aiming for an approval in calendar year 2024.

We will be leveraging our existing trauma and burn center sales point and incrementally growing our sales force to address this opportunity.

Patients presenting with a requirement for skin grafting and resell.

But for Burns trauma or other skin repair are routinely treated by the same surgeons within an institution. We already know some of our top accounts are using resell for trauma as they seek to find the best outcomes for their patients as an example, a top surgeon at University.

Medical Center in New Orleans, which is one of our top 10 accounts has told us that approximately 10% of their resale procedures are currently performed on trauma patients.

Based on our internal calculations, we foresee a serviceable addressable market or Sam for trauma.

What's the injury of $450 million.

Moving on now from Burns and trauma to our continued progress in vitiligo.

For those unfamiliar with the condition vitiligo is a skin disorder characterized by deep pigmented areas of skin that appear as a white spot or patches.

And which are primarily attributed to an underlying autoimmune disorder in the patient.

There are an estimated 100 million sufferers of <unk> worldwide, including up to $6.5 million Americans of.

Of those in the U S. We estimate approximately $1.3 million have stable that legal.

So meaning that their underlying autoimmune disease is being well managed and that their disease is not continuing to spread we estimate the opportunity for resale to reap pigment stable vitiligo patients in the U S is at least $5 billion and there is no FDA approved product presently.

Mobile to enable re pigmentation for these patients.

Recently FDA approved our proposal for a single arm that are like Oh trial powered with 23 subjects with each site required to complete <unk>.

Treatment of our running subject for purposes of training.

We have as a reminder, our original trial was a three arm trial with 84 patients. While this means we will restart enrollment we already have 15 centers up and running a robust recruitment program and we continue to expect that enrollment will be completed by the end of calendar.

In 'twenty, one and we continue to plan for approval in 2023 to.

To further support this opportunity our products team is developing a new fully automated version of the resale system tailored for the dermatology setting.

This is being designed to support our commercial plan.

20, <unk> and I look forward to updating you as we progress.

Work advances in our collaboration with the University of Colorado Gate Center for regenerative medicine, and Epidermolysis, <unk> or <unk> and with the Houston Methodist Research Institute and rejuvenation in.

For a bit of cases, we are successfully demonstrating the intended molecular and cellular changes in the laboratory setting and we are now shifting towards demonstrating that these modified cells will form new skin in animal models. These programs. Both aim to show preliminary proof of concept.

Concept by the end of this calendar year.

I would now like to walk you through the growth drivers we see ahead.

We continue to drive forward on physician engagement and education, whether in person or virtual notably our discussions with burn surgeons have largely shifted from.

Whether or not to use resell to our focus on optimizing the use of <unk> as well as training and refining the expertise of supporting staff.

Our commercial team will be continuing to drive penetration into our burn center accounts, where vac approved and what we believe is a critical massive burn.

<unk> centers and with that we are focused on penetration within those accounts we.

We have shown that our strategy of driving into smaller berms results in overall broader resell usage and looking ahead, we are leveraging our educational efforts and our expanded label in pediatrics.

Pain to drive more engagement.

In late July CMS released the 2022, Medicare outpatient prospective payment system proposed rule, which contains a review of resells transitional pass through or CPT payment application.

We anticipate the final rule will be published before calendar year end with payment going into effect in January of 2020 to.

Assuming a successful outcome a C code will be assigned to resell, which we anticipate will cover the cost of the device for all Medicare and Medicaid.

Patients.

We would then commence a pilot launch at key sites to ensure coverage with commercial carriers before initiating a broader nationwide launch likely in mid 2022.

Our pipeline initiatives are moving forward.

Specifically, our trauma in vitiligo.

Clinical trials continue to make gains toward completion.

We are especially excited about both our new single arm vitiligo trial as well as our soft tissue trial enrollment, which has 43 or 65 patients enrolled and appears to have benefit from the recent increase.

Walmart related accidents, we continue to be optimistic about our preclinical pipeline work in epidermolysis below.

And rejuvenation and expect to have demonstrated proof of concept by the end of the calendar year I look forward to sharing our progress there today, we are much more.

More than a byrne's business moving to our last growth driver, we anticipate broadening our geographic footprint over the coming years together with our commercial partner Kosmos Tech, we continue to seek approval in Japan.

As previously reported we completed the three required.

Non clinical bench top studies in August of 2020 as scheduled the Japanese Health Authority has recently undertaken there good clinical practice or GCT audit related to Aviva medical with no exceptions noted to date.

<unk> Tec will meet with the Japanese reimbursement.

MH L W or ministry of Health Labor and welfare to present resell for reimbursement review in the near future our efforts in interactions with cosmetic and the Japanese regulatory authority are ongoing and we continue to expect approval by calendar year end 2021 of our.

Our application for marketing approval of the resell system under Japan's Pharmaceuticals, and medical device Act or <unk>.

We are also planning reentry into other U S markets. Following U S approval of new clinical indications for the resale system.

At that time.

We expect to have sufficient economies of scale provided through multiple resell indications to provide adequate IRA ROI to justify the significant investment required required in salesforce infrastructure training and reimbursement activities. So that we can leverage.

Existing resell CE, Mark and TGI registration.

In summary, we accomplished a lot over this past quarter.

Our legacy Byrne's business showed strong growth, we received approvals for expanded burn indication covering pediatrics and extensive burns.

George we submitted a PMA supplement for our new resell device, we made significant strides with our two lead clinical trials and we've made strong progress on our pipeline and product development.

Fronts.

With that I'll now turn it over to Michael for details on our financial.

Performance in the quarter Michael.

Thank you Mike in the fourth quarter ended June 32021.

Total net revenue increased 166% to $10.3 million.

Compared to $3.9 million in the corresponding period ended June.

June 30 of 2020 and compared to $8.8 million in the prior quarter at quarter ended March 31.2021.

In the fourth quarter retail commercial revenues increased 72%.

$6.7 million compared to the prior quarter.

While resale revenues associated with biomedical advanced research and development Authority BARDA.

Our $3.6 million and attributable to the delivery of resale units for emergency response preparedness.

Gross profit margin was 80% for the fourth quarter of 2000.

One compared with 77% in the corresponding quarter last year.

The increase in our gross profit margin resulted from lower shipping costs and increase production.

Operating expenses were $13.4 million in the fourth quarter of 2021.

Compared with <unk>.

$16.5 million in the same quarter last year.

The decrease in operating expenses is primarily attributable to lower stock based compensation.

Along with higher costs in the prior period associated with the re domicile transaction.

Partially offset by higher.

Higher cost and research and development in the fourth quarter.

Lower stock based compensation in the fourth quarter was driven by certain performance milestones being met in the prior year.

Higher research and development expenses have resulted from a ramping up of clinical trial related activities related.

Related to bits of Lago and soft tissue as well as other costs incurred to improve the company's resale platform technology and further expand the company's pipeline.

Net loss was $4.7 million for the fourth quarter of 2021 and net loss per share was.

<unk> on a weighted average basic and diluted share count of $24.9 million compared.

Compared to $12.9 million and a net loss per share of <unk> 60.

On a weighted average basic and diluted share count of $21.4 million in the same period of.

The prior year.

Cash was $110.7 million as of June 32021.

Moving on to guidance for our first fiscal quarter, we expect total commercial revenue.

In the first fiscal quarter to be approximately.

$7 million.

With that we thank you for your attention and now I will turn the call back over to the operator for your questions.

Thank you ladies.

Ladies and gentlemen, as a reminder to ask a question you would need to press Star then one on your telephone.

So withdraw you question.

Okay again, Thats star one to ask a question. Please standby, while we compile the Q&A roster.

Yeah.

Our first question comes from the line of Josh Jennings with Cowen Your line is open.

Hi, Joe.

Good afternoon, Mike and Michael that you've taken.

The question.

Yeah totally problems.

Quarter.

Okay.

Wanted to ask about fiscal <unk> guidance.

Fiscal <unk> guidance.

$10 million of commercial revenue.

For improvement it sounds.

Christa.

We're seeing to date in August and July Youre, not seeing disruption from Delta, but I was wondering.

Just help us understand what type of headwinds you are seeing in the first phase and then particularly with the trends in August is in line.

Thanks for your question.

<unk> Josh.

We are seeing some softening.

In August I'm actually.

In addition to Michael and myself.

We've got Eric <unk>, our Chief commercial officer, as well as Andrew <unk>, Chief Technology Officer with me here.

They'll also be.

Available to answer questions.

And for this one.

I'd like to pass it over to Aaron to give you a little bit more color on the revenue growth and our estimate of $7 million for commercial revenue in the first quarter sure Hi, Josh how are you.

So I think what we're.

We're seeing and what we've kind of anticipated as there is a certain degree of seasonality as you move towards the fall that.

That we're starting to see.

In the August timeframe and that we're anticipating as we move into September. So I think that is separate from COVID-19 related.

So the Delta there and we're certainly seeing that more so in the south we're seeing that kind of affect hospitals.

<unk> staff.

Not as much affecting sales yet certain procedures are getting affected but if anything more so delayed than anything else.

But again I think.

But we'll have to just wait and see how that might pan out, but I think more than anything it's the seasonality, but I think that we're anticipating more so.

Great and then just one quick follow up on this topic.

The firms.

Teekay from 2020, there's some some significant reductions in for instance.

Just to be clear you're not seeing any.

Reduction in burden that availability, so far with itself as soon as that.

I hear that correctly.

Yeah, that's correct, we're not yet seeing any effect on bed availability.

And we're hoping that we don't going forward.

Great.

A quick question on the pipeline just on the pivotal trial design optimization.

Sure sure the signals.

The feasibility trial or other datasets.

Have a crew.

A decision to optimize.

Very good.

On the Pfizer one to 10 expansion issue arms.

And did you need to show those signals of those datasets to the FDA to have can have them accept the trial design modification.

And is this your optimism that this is the lately.

So from an efficiency standpoint, and the commercial standpoint getting that.

1% to 20 expense ratio.

Station on DSO.

So I'll start off with an answer to that question, Josh and then pass it over to Andy.

Definitely.

We are.

Solid and selecting the one.

1% to 20 expansion going forward in the single arm trial design with 23 patients that's powered to 90%.

And we're feeling very comfortable to talk about the data sets that underpin.

That decision.

Ill pass it over.

Over to Andy.

Mike Hi, Josh.

We have not relied on the feasibility data.

With respect to our FDA submission.

But.

And it's early days in this.

Feasibility program.

Any case to date nothing.

In those data.

Counter to the decision that we have made which is it's a strategic decision to sort of consolidate study power into a single arm.

And there are multiple data points feeding into that.

Recent publications are.

Showing.

<unk> results strong results at the 1% to 20 and higher expansion and our own internal development work on the bench is showing.

That the fluid volumes associated with.

Preparation of the 1% to 20.

They'll suspension.

Our optimal for.

Cell harvesting.

And so it's really those data that we used in our FDA submission to.

Consolidate to a single arm.

Excellent. Thank.

We'll take your questions.

Thanks, Joe Thank you.

Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is open.

Great. Thanks, so much for taking my questions.

I know, there's some softening here in fiscal Q1, as a result of Covid I get that but what I'm really.

Interested in is the sequential improvement you saw in fiscal Q4, and I know it's a.

Fourth quarter, and a bigger push them on the sales force, but that by my numbers is about a 40% sequential increase on a per surgeon basis versus fiscal Q3, so it seems like the.

The strategy of going deeper in these existing accounts is really starting to get traction. So I'm just wondering as we come out of Covid and some of the impacts you're seeing there I mean.

The ability to drive.

Deeper and deeper penetration seems like is proving out so how quickly can you get back to doing that and then you know.

Again the.

Revenue per Doctor that I'm seeing right now in Q4 was about $45000 roughly.

Where do you think that 45000 can go over time.

Aaron do you want to take this one so I think there was a few things that are happening last quarter is that just to put in perspective, So first of all.

You know the pendulum somewhat swung right when the people who are in massive locked down and all of a sudden people got their vaccinations and we're able to go out and live again and because of that the accidents. The pendulum swung from because of lock down very little accidents to all of a sudden the accidents in the incidents of Burns really increased.

Exponentially, so I would say that.

Our sales is driven by two in two parts one part was accident.

And abnormally high accidents, unlike I've ever seen an increase before so and that was due to the desire for people to get out and live again, because they've been cooped up.

It was also driven by the sales team was ready and able to go they were able to start meeting with accounts like they were able to have live events.

That are much more impactful than virtual events, we started having offsite training events, we started having just off site engagement and live engage.

Engagement, that's much more impactful.

But you're right. So we deepen penetration, but there was just a lot more cases burns actual incidents of burns with much higher. So it was those two things together. So I think the incidents of burns the pendulum coming back down as I mentioned kind of the seasonality of the incidents.

<unk> Burns is coming back down.

We are seeing some tightening of restrictions due to delta variant coming back into play as well.

We are seeing kind of discussions of the fall Burns meeting going back to virtual we are now we've got one more live meeting planned, but the rest of our life meetings that we had planned for the fall.

And we're putting on pause until we see what happens kind of with the Delta variance. So you know there's a few unknown variables that are going to play out here, but I think you're absolutely right. I mean, we were very successful moving the needle in terms of penetrating with accounts, but there was a lot more variables to play there.

And so it's it's a it's.

I think there's many more dynamic to kind of kind of <unk>.

Look at.

If that helps okay.

I guess, maybe just to put it it's very helpful. Just to put a finer point on that here and what I'm really curious about is when they are reaching for resale versus doing a traditional skin graft.

I know there.

It seems like the volume was strong gear is there any way to kind of parse out volume versus just your market share taking where people are saying you know what I'm not going to do traditional grafting I'm going to use resale instead.

Yeah, and that's the tough part about it right because we the N V. Our data that we get from the a D. A is for the year, we don't get that.

That until a year later, we are starting to track skin grafting data, but we get that in a six month delay right. So what we're getting is just kind of AD hoc feedback from the sites on the kind of.

Increase in admissions.

So I don't have hard core data in terms of what those exact number of procedures are for the quarter and what are capturing.

Rate was in terms of exact retail eligible for you to show what you want is the market share capture of eligible procedures right.

That data is challenging.

Okay. Okay. It certainly feels like it's going the right direction, though so thankfully.

Thanks for that and then the follow up to my my two questions first question.

But our keep our first question but.

Josh has pointed out the single arm has been a while ago.

I'm just wondering you know 19 patients I noticed by year end, you said that before for the other study design going down to a single arm, though Q to crunch the data faster isn't the cost of the trial going to be a little bit lower as a result of this and then is there any.

Any risk.

That is not viewed as a more robust clinical study because there's that multi arm.

As a clinician once you do get the approval.

So let me again start out with a response here and then pass it over to Andy to add some color to it but.

We've got 23 patients that will be enrolled in the pivotal trial each site.

To do a run inpatient as Andy previously mentioned.

Basically it's a practice patient to make sure that they've got the procedure down right.

And.

We don't.

Feel that we're losing anything.

Bye.

Not studying the one to five one to 10 concentrations.

Because it's not a linear.

Basically rollout.

Availability of.

Skin cells.

Relative to diluent when we look at the suspension and Thats, what Andy is talking about when the speaks about the laboratory results that his group has uncovered.

In the meantime.

So there seems to be a greater efficiency.

As.

At a 1% to 20% with that fluid volume and the cellular suspension.

So we feel very confident also.

Seeing publications coming out.

With 1% to 21 to 40.

And getting good results with those patients.

And.

I'll pass it over to Andy now if you want to add any color.

You are correct that this trial design is more cost effective for us.

And.

Just to put it in what Mike is saying the.

Our data don't predict a difference between the one to 10.

One to five 1% to 20.

So.

That was really what underpinned our decision.

Does that answer your question Matt.

Perfect. Thanks, so much.

Alright, thank you.

Our next question comes from the line of Lyanne Harrison with Bank of America. Your line is open.

Hi, Mike Hi, Michael.

I didn't come back to the top 20 accounts obviously.

Great to see.

The base of accounts with a top 20 now.

40%, but if I think about rising cases in the United States.

Give us a sense of.

How many of those top.

20 accounts might be.

Well.

They had significant increase in the Delta variant cases.

Aaron are you able to answer that yeah well.

I would say that.

Oh gosh, a good chunk I mean.

Many of our largest accounts are in the top 20, so yeah, I mean, I can if I look at the numbers Oh gosh almost half of them are in the top 20 are in the areas that are affected with the delta in terms of the actual proportionately. The makeup of the total sales of the top 20 accounts.

That makes sense okay.

With those accounts.

As you said with me today are you seeing any material change.

Yes.

For those.

<unk> accounts.

So there are changes in access, but we're still able to get in right. So for example, when I say that Theres no what we call plus one you can't bring anybody with.

You are able to get in to support a case to do a training to be therefore, the aftercare you are now for some hospitals required to have to be vaccinated.

There are kind of more strict requirements to get in them, but we are still able to get and then the other.

Issue that is that many of the staff are out with Covid in many of the nurses are out with Covid. So were actually required to be in more often to help support cases or two trend. So if anything we've seen some cases get delayed because of that but we haven't to my knowledge actually lost the case because of that quite yet.

Okay.

Thank you and if I could follow up.

With the approval for <unk> for pediatric.

I will open.

Can you give us an indication of what sort of traction you're getting with the pediatric hospitals today.

So again I'll start off.

Okay.

Over to Erin.

And we are getting traction and there is a specific pediatric campaign for pediatric only facilities.

A good example is UC Davis.

Were there one of the top accounts.

And.

<unk> got there.

Other major hospital across the street, they've got Shriners hospital for children, only and they signed on with US partially because of that expanded label with pediatrics.

So that's just an example, there so we are getting additional traction and I'll pass it onto errand for.

Or any additional color.

Theres not a lot of.

Pediatric only burns hospitals in the United States.

So those that are are the ones that we're now working with to try and get what we call back approval or hospital administration approval.

And so.

Many of those hospitals are in that process right now typically that process can take six months, sometimes longer to kind of get through that so we haven't had.

We haven't had our approval for very long. So we're just kind of getting through that process for the most part with most of those accounts, but.

The label has certainly been very very.

<unk> getting approval and also now accessing those conversations and starting the process off in those pediatric only accounts.

And also it's been helpful getting access into other accounts just to have new conversation.

Because that also is another excuse to get into hospitals, it's considered.

It's considered a new product or new news and it is it does allow us entry into the hospital to talk about this the new data that we have and the new label.

Okay, great. Thank you very much.

You're welcome Thanks Liana. Thank you.

As a reminder, ladies and gentlemen that star one to ask the question.

Our next question comes from the line of Ryan Zimmerman with B T. I E. Your line is open.

Hey, Thanks for taking my questions. It's great to see all the progress just ask my two questions upfront and kind of talk to Matt's question.

For you Aaron.

No we're talking about all these utilization dynamics.

What are you potentially displacing.

Whether it's been grafting.

Or other products and some of these cases I'd love to understand.

What you could be also replacing beyond skin grafting and then the second question and Mike I know you don't want to prognosticate on pasture sense, but.

If you read the comments, where you have to you know there was a discussion around whether resell itself as a device and how they're thinking about it and so I love just your latest thoughts on you know.

What you think or what your interactions with the agency or CMS has been around this and kind of where your head's at in terms of getting.

Pass reliable and thanks for taking the questions.

Sure Ryan why don't I, let Aaron answer the first question about what are we displacing beyond skin grafts. So I'll take the second one on our pass through payment.

To be clear our targeted skin grafting skin grafting as the standard of.

Got it and that's skin grafting is where the volumes at the only other product.

Episodes, the only other products in the market and the volumes with episodes are still though their price point is very very high.

But when you actually look at what that equates to in terms of procedural volume. It is very very low and that's not that's not meaningful for us in terms of.

So that's not our target our targeted skin grafts.

And any time that you may require a skin graft consider resell and essentially TBS phase or total body surface area of 5% and higher or is it pretty much our sweet spot.

Time, you could require skin grafts so.

But it's really it's changing the standard of care at the total paradigm total paradigm shift.

That's what we're focusing on.

And I'll just follow up on the pass through payment for outpatient and you are correct.

CMS.

So the Federal Register.

Said that we basically check all the boxes.

But they are uncertain, we are or should be classified as a device of course, we do have a PMA approved which is a device. We do have device breakthrough designation.

And the FDA.

As a fully regulated us.

<unk>.

And there is also a change of staff, but that's gone on at CMS and what I believe is that it's really a reeducation.

Program.

Our process that we need to go through with the change of staff to get them up to speed and have them really understand the details of what's been going on and of course during the open comment period.

CMS is not going to.

<unk>.

Provide any additional commentary on it.

We remain confident that.

This will come through with that being they're only.

Yeah.

Aaron I don't know.

Members of that group reports to you, but anything to add I think.

I think you've covered it I mean, hopefully we'll typically they will publish the final rule in November last year with a little bit later in December, but hopefully well or more by year end.

We're optimistic.

We I think we were surprised on that feedback given everything that you said.

Have to wait and see.

Okay I appreciate the color.

Thank you guys. Congrats on all the progress this quarter.

Thank you Ryan.

Thank you.

Our next question comes from the line of John Hester with Bell Potter Your line is open.

Good afternoon, everyone and thank you for your time today.

Well, if you could just expand on your comments.

The Japan market, it's Linda.

Really close now actually you said like 'twenty one through an expected approval is presumably if we launch in calendar year 'twenty. Two can you just run through the coupons on your commercial arrangements with cosmetic please.

Sure.

And so there might be some volume volume comments sorry.

Sure why don't I start off and then.

Maybe pass it to Michael holder for some additional color commentary if he has any.

But.

Our arrangement with caused an attack.

Our partner in Japan is that approximately.

50% revenue share.

And.

The progress there's a GCB audit that has begun no findings to date Theres also some planned discussions with the Ministry of health Labor and welfare on reimbursement, which are all very.

A positive comment commentary relative to the approval coming up.

At calendar year end, which we have not changed our guidance on.

And we still do anticipate that and we do anticipate a launch in 2022.

And so far.

Paul Humes and how much will sell or cosmic tech will sell rather.

It's hard to say until we actually get the label from PMT a because.

Cosmo Tech with us in collaboration we have applied for a very broad label to include.

As the Burns and we're confident of getting the indication of Burns, but it also include soft tissue. It also includes that ally go that also includes potentially chronic <unk>.

So dependent upon what indications are actually approved by the P. M D E and given.

Reimbursement by the MH L W.

That will determine the volumes and then the revenue that's going to be coming to us.

That.

As for your question John but thank you. Thank you Mike just detailed.

Follow up.

Just as a follow up Mark.

What do you believe is the.

Market in Japan for a bit longer in terms of how many stable patients just as $1.3 million in the U S. How many.

Any idea of what that could be in Japan.

Generally, it's 10% as well.

Will a thumb.

Let me pass it over to Aaron to give you more detail, but she may have yeah.

And Japan have a little bit.

Sure.

China, Japan, and the U S are kind of the highest nation for vitiligo. There is about 2 million patients that suffer from vitiligo. If you use the same proportion that we have in the U S for stable.

Stable, that's just over half a million.

Stable.

<unk>.

Okay.

And Mark just finally.

Also talked about how the geographic expansion is anything happening beyond Japan at this point.

At this point no.

No, we're really waiting for additional indication approvals.

And.

To be more specific once we got soft tissue in vitiligo.

Proved in the United States, then we will have the.

Necessary ROI that.

We need to go into each country.

In Europe.

Get a salesforce going negotiate reimbursement.

Do our economic models.

And.

Really get into.

Europe as well as back into Australia.

Excellent.

Yeah.

Okay.

Well that's your job.

I'm not showing any further questions in the queue.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.

Uh huh.

Okay.

Thank you.

[music].

[music].

[music].

[music].

Ladies and gentlemen, thank you for standing by and welcome to the BD Medical Inc. Fourth quarter 2021 earnings Conference call.

At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question.

During this session you will need to press Star then one on your telephone please be advised that today's conference is being recorded.

If you require any further assistance. Please press star then zero.

I'd now like to hand, the conference over to your speaker for today Caroline corner you may begin.

Yes.

Thank you operator, welcome to our BD medical fiscal fourth quarter and full year 2021 earnings call. Joining me on today's call are Mike Perry, President and Chief Executive Officer, and Michael holder Chief Financial Officer.

This call will include forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.

All statements made on this call that do not relate to matters of historical facts should be considered forward looking statements, including statements regarding the markets in which would be the operating trends and expectations for VITAS products and technology trends and demand for VITAS products. If he does expected financial performance expenses and position in the market and the impact of Covid.

19 on a VITAS operations leaders customers operations. These statements are neither promises nor guarantees and involve known and unknown known risks and uncertainties that could cause actual results performance or achievements to differ materially from any results performance or achievements expressed or implied by the forward looking statements. Please review of beat his most recent filings.

Filings with the SEC, particularly the risk factors described and if he does right and 10-K filings and then Abbvie. This quarterly report on Form 10-Q for the fourth quarter ended June 30th 2021 for additional information.

Any forward looking statements provided during this call, including projections for future performance are based on management's expectations.

Today I'll.

Have you done undertakes no obligation to update these statements except as required by applicable law.

This press release with fourth quarter and full year 2021 results is available on the VITAS website, Www Dot Davita medical dot com under the investors section.

About a veto financial results.

But if he does website all sorts of latest SEC filings, which you are encouraged to review a recording of today's call will be available on our website by five P. M. Pacific time today now I'd like to turn the call over to Mike for his comments and fourth quarter 2021 business highlights.

Thank you Caroline and thank you everyone for joining.

Okay.

We made strong progress on our growth objectives in the fourth quarter as you know from our pre release in June commercial revenues, not including BARDA related revenues were strengthened substantially in the quarter up 45% quarter over quarter, reflecting reopening.

<unk> of parts of the economy, which led to a corresponding increase in accidents as well as continued penetration into our burn center accounts as we began to see some improved access to hospitals and increased procedures.

While it would be premature to say that the pandemic is behind us, especially.

Especially given the recent developments with the Delta variance. We are encouraged by our recent commercial performance I remain extremely excited about the opportunities ahead with our pipeline indications here.

<unk>, we are driven by our primary goal of commercializing our proprietary technology to enable.

Health care providers to successfully address skin defects to save lives and improve quality of life for our patients.

As we grow from treating burns trauma to vitiligo to cell and gene therapy and to aesthetics and beyond our focus is on delivering leading edge.

Therapeutic skin restoration solutions to our patients.

While the company was founded with earned treatments in mind. Our team is working to leverage our point of care autologous spray on skin platform across many markets and indications and I am very pleased to update you today on our latest.

Developments with that I'd like to turn now to our Byrne's business.

A quick update on the product development front here at the end of June we submitted to the FDA a PMA supplement for our new version of the resell device with enhanced ease of use.

We anticipate FDA approval in the first half of calendar 2022, and commercial launch thereafter.

In our fiscal fourth quarter, we saw Covid abating in many geographies, which led to various degrees of economic and social recoveries, which in turn resulted in a corresponding increase.

And accidents, our sales team was able to regain some momentum with our customers, which is reflected in our revenue results I'm very proud to report that our resale commercial revenues were a record $6.7 million in the fiscal fourth quarter compared to four.

$6 million in the previous quarter ended March 2021.

We realized the significant revenue growth primarily from the increase in burn cases, but also from our commercial teams further penetration and burn center accounts, our organization remains well positioned to respond.

Bond and quickly pivot to changes in burn related accidents.

We have been building, our burns focused salesforce for over two and a half years and believe we have the largest and most experienced burns dedicated sales force in the market.

In the quarter, we saw increased penetration into accounts and proceed.

Seizure spanning all burn sizes, including smaller Burns, which has been our focus of late approximately 80% of our burn cases come from these smaller wounds are wounds comprising less than 30% TBS say, where total body surface area.

We ended fiscal 'twenty.

1021 with over 100 hospital accounts with the NBA estimating that there are 136 burn centers in the United States and I believe and as we've mentioned previously we feel that we have established a solid footprint in burn center hospitals.

Our focus is now on driving utilization and broadening penetration within this footprint. We believe our recent sales performance illustrates success with implementing this plan.

Revenue from our top 20 accounts increased approximately 25% in fiscal Q4 over fiscal.

Q3, demonstrating strong growth if we look back a year ago. Our top 20 accounts were contributing 66% of our burn revenue today with a much larger revenue base. Our top 20 accounts are delivering just over 40% of revenue reflecting utilization.

<unk> across a broader base of burn centers with over 50% of burn surgeons using resell in the quarter and over 80% of the approximately 300 U S. Burn surgeons trained to use the resale system. We have indeed establish a broad user base as we look.

Our sales force will be focusing primarily on driving and expanding usage and adding surgeon users within our existing accounts.

The Delta variant spreads we are seeing increased access restrictions and we anticipate a potential impact on the avail.

Taylor ability of burn beds, particularly in the south of note data from an Eva sponsored series of surveys between April through August of 2020 showed that of 2082 burn beds identified in the United States only 845 beds or.

Or 40% were available in April of 2020, and EMEA were 572 burn beds or 27% were available in August of 2020.

The impact we saw last year during the Covid peak did influence our sales and while we don't currently.

We think the Delta variant will be nearly as disruptive and we are not currently seeing an impact on burn bed availability, we are prepared to pivot and deploy our learnings from the prior waves of Covid moving forward, we continue to leverage our sales forces deep.

Relationships and experience our training capabilities physician engagement programs, a new outreach efforts to educate and engage burn care providers today. Our sales force is able to access most accounts to support cases, and aftercare and to perform training.

During the fourth quarter, we saw a substantial traction in small offsite abita events and these live sessions drove physician understanding of incorporation of resell into their daily practice and correspondingly our revenue increase.

This summer has been slow in terms.

As a professional meetings due to the patent demick status and the impassioned restart of vacations, yet we expect resumption of regional meetings in the fall.

While meetings and conferences are currently planned to be in person. They may change to a virtual as a result of the spreading delta variant.

Fortunately enthusiasm from physicians has been very high and we have been successful in the past at a definitely pivoting to virtual meetings. So.

We will continue to be flexible as necessary with our participation at meetings and with our physician interactions.

With our recent label expansion to treat full thickness thermal burns and patients one month of age and older in July we rolled out a campaign targeting pediatric burn treatment.

As you May know unfortunately, nearly a quarter of all burn cases in the United States occur in.

Children under 16 years of age one of the main goals within the burn community in here at a vida is to avoid painful surgeries scarring and multiple grafting procedures from analysis of our continued access and compassionate use data resale significantly reduce the mean number.

Of pediatric grafting procedures compared to national burn repository data.

Our results showed one six grafting procedures using resell in combination with graphs versus three six procedures using conventional split thickness skin grafts, which is.

Very compelling improvement given the pain and scars that patient's endure.

While we do not expect the pediatric label expansion to move the needle significantly on our topline revenue in the near term. We can now engage burn centers that are pediatric only facilities and we are.

Now providing a comprehensive commercial effort that is able to address the vast majority of burn patients.

Our commercial team is finding that our new label is reinvigorating conversations for example, after an extended sales effort UC Davis, one of the largest U S burn centers recent.

We added resell to their formulary driven in part by the new expanded label.

You may have seen a recent news report in late July in Yonkers, New York of our mother and child being hit by an alleged drunk driver.

The child was pinned under car and was severely.

Nearly burned.

I'm very pleased to tell you that resell was used successfully to help that child.

And seeing these heartbreaking cases, it is truly a privilege to be in a position to make a meaningful difference in the lives of these children and their families.

Another.

Another area of important impact for us is the subject of injuries not originating from burns.

The reopening of the economy and the corresponding increase in accidents meant that in the fourth quarter enrollment in our soft tissue reconstruction trials accelerated as.

As a reminder.

This trial involves non burn wounds, such as those with necrotizing soft tissue infections, and the gloving injuries, which are wounds that commonly present at the same trauma centers. We are where we are currently serving our burn patients.

If you recall, we had our first patient.

Pivotal trial enroll in March 2020, and we saw slow enrollment for the first year due to the patent debit.

We have 17 participating sites with 32 subjects enrolled and treated as of June 30, our AUM.

Over the last two quarters, we have seen patient enrollment picking up.

And that's per instance during July eight additional patients were enrolled three patients have been recruited so far in August and our goal is to complete recruitment of all 65 patients by late 2022 with a six month follow up for patients in this trial, we are aiming for an approval in calendar.

Words of year 'twenty 'twenty four.

We will be leveraging our existing trauma and burn center sales point and incrementally growing our sales force to address this opportunities page.

Patients presenting with a requirement for skin grafting and resell whether for burns trauma or other skin.

Calendar there are routinely treated by the same surgeons within an institution.

We already know some of our top accounts are using resell for trauma as they seek to find the best outcomes for their patients as an example, a top surgeon at University Medical Center in New Orleans, which is one of.

Skinner about 10 accounts has told us that approximately 10% of their resale procedures are currently performed on trauma patients.

Based on our internal calculations, we foresee a serviceable addressable market or Sam for trauma and soft injury of 450 million.

Our toddlers.

Moving on now from Burns and trauma to our continued progress in vitiligo.

For those unfamiliar with the condition vitiligo is a skin disorder characterized by deep pigmented areas of skin that appear as white spots or patches, and which are primarily attributed to an underlying.

Autoimmune disorder in the patient.

There are an estimated 100 million sufferers of <unk> worldwide, including up to $6.5 million Americans.

Of those in the U S. We estimate approximately $1.3 million have stable vitiligo, meaning that their underlying autoimmune disease.

Underlying being well managed and that their disease is not continuing to spread.

We estimate the opportunity for resell to reap pigment stable that <unk> patients in the U S is at least $5 billion and there is no FDA approved product presently available to enable re pigmentation.

As these patients.

Recently FDA approved our proposal for a single arm <unk> trial powered with 23 subjects with each site required to complete treatment of our running subject for purposes of training as a reminder, our original trial with a.

<unk> for the arm trial with 84 patients.

While this means we will restart enrollment we already have 15 centers up and running a robust recruitment program and we continue to expect that enrollment will be completed by the end of calendar 2021, and we continue to plan.

Three for approval in 2023.

To further support this opportunity our products team is developing a new fully automated version of the resale system tailored for the dermatology setting. This is being designed to support our commercial plan for vitiligo and I look forward to updating.

Dating you as we progress.

Work advances and our collaborations with the University of Colorado Gate Center for regenerative medicine, and Epidermolysis, <unk> or <unk> and with the Houston Methodist Research Institute and Rejuvenation in both cases, we are successfully.

Demonstrating the intended molecular and cellular changes in the laboratory setting and we are now shifting towards demonstrating that these modified cells will form new skin in animal models. These programs. Both aim to show preliminary proof of concept by the end of this calendar year.

<unk> I would now like to walk you through the growth drivers we see ahead.

We continue to drive forward on physician engagement and education, whether in person or virtual notably our discussions with burn surgeons have largely shifted from whether or not to use resell to a focus on optum.

<unk> the use of <unk> as well as training and refining the expertise of supporting staff.

Our commercial team will be continuing to drive penetration into our burn center accounts, where vac approved and what we believe is a critical massive burn centers and with that we are focused on penetration.

<unk> within those accounts.

We have shown that our strategy of driving into smaller berms results in overall broader resell usage and looking ahead, we are leveraging our educational efforts and our expanded label and pediatric campaign to drive more engagement.

In late July CMS released the 2022, Medicare outpatient prospective payment system proposed rule, which contains a review of resells transitional pass through or TPP payment application. We anticipate the final rule will be published before calendar.

Your year end with payment going into effect in January of 2022, assuming a successful outcome a C code will be assigned to resell, which we anticipate will cover the cost of the device for all Medicare and Medicaid patients.

We would then commence a pilot launch.

At key sites to ensure coverage with commercial carriers before initiating a broader nationwide launch likely in mid 2022.

Our pipeline initiatives are moving forward, specifically, our trauma and vitiligo clinical trials continue to make gains toward completion.

<unk>.

We are especially excited about both our new single arm vitiligo trial as well as our soft tissue trial enrollment, which has 43 or 65 patients enrolled and appears to have benefit from the recent increase in trauma related accidents, we continue to be optimistic.

Domestic about our preclinical pipeline work and epidermal licensed below.

And rejuvenation and expect to have demonstrated proof of concept by the end of the calendar year I look forward to sharing our progress. There today, we are much more than a byrne's business moving to our Alaska.

Last growth driver, we anticipate broadening our geographic footprint over the coming years together with our commercial partner Cosmo Tech we continue to seek approval in Japan as previously reported we completed the three required non clinical bench top studies in August of 2000.

20 as scheduled the Japanese Health Authority has recently undertaken there good clinical practice are GCT audit related to a beta medical with no exceptions noted to date.

Kosmos Tech will meet with the Japanese reimbursement MH L W or ministry of Health Labor and welfare.

Fair to present resell for reimbursement review in the near future our efforts in interactions with cosmetic and the Japanese regulatory authority are ongoing and we continue to expect approval by calendar year end 2021 of our application for marketing approval of the resale system.

Under Japan's pharmaceutical and medical device Act or <unk>.

We are also planning reentry into other U S markets. Following U S approval of new clinical indications for the resale system at that time, we expect to have sufficient economies of scale provided.

Provided through multiple resell indications to provide adequate iron ROI to justify the significant investment required required in sales force infrastructure training and reimbursement activities. So that we can leverage our existing resell CE Mark and TGI.

Registration.

In summary, we accomplished a lot over this past quarter.

Our legacy Byrne's business showed strong growth, we received approvals for expanded burn indication covering pediatrics and extensive burns we submitted a PMA supplement for our new resell device.

We made significant strides with our two lead clinical trials and we've made strong progress on our pipeline and product development.

<unk>.

With that I'll now turn it over to Michael for details on our financial performance in the quarter Michael.

Thank you Mike in the fourth quarter ended June 32021, total net revenue increased 166% to $10.3 million.

Compared to $3.9 million in the corresponding period ended June 32020, and compared to $8 eight.

$8 million in the prior quarter at quarter ended March 31.2021.

In the fourth quarter.

Michelle commercial revenues increased 72%.

To $6.7 million compared to the prior quarter.

While resell revenues associated with biomedical advanced.

Research and development authority BARDA were $3.6 million and attributable to the delivery of retail units.

Our emergency response preparedness.

Gross profit margin was 80% for the fourth quarter of 2021 compared with 77%.

In the corresponding quarter last year.

The increase in our gross profit margin resulted from lower shipping costs and increase production.

Operating expenses were $13.4 million in the fourth quarter of 2021.

Paired with $16.5 million in the same quarter last year.

The decrease in operating expenses is primarily attributable to lower stock based compensation.

Along with higher costs in the prior period associated with the re domicile transaction.

Partially offset by higher cost and research and development in the fourth quarter.

Lower stock based compensation in the fourth quarter was driven by certain performance milestones being met in the prior year.

Higher research and development expenses have resulted from a ramping up of clinical trial related activities related to vitiligo and soft tissue as well as other costs.

Cost incurred to improve the company's resale platform technology and further expand the company's pipeline.

Net loss was $4.7 million for the fourth quarter of 2021 and net loss per share was <unk> 19 on a weighted average basic and diluted.

Share count of $24.9 million.

Compared to $12.9 million and a net loss per share of <unk> 60.

On a weighted average basic and diluted share count of $21.4 million in the same period of the prior year.

Cash was 100.

And $10.7 million as of June 32021.

Moving onto guidance for our first fiscal quarter, we expect total commercial revenue in the first fiscal quarter to be approximately $7 million.

With that we thank.

Thank you for your attention and now I will turn the call back over to the operator for your questions.

Thank you.

Ladies and gentlemen, as a reminder to ask a question you would need to press Star then one on your telephone.

To withdraw your question press the pound key again Thats star one to ask the question.

Please standby, while we compile the Q&A roster.

Yeah.

Our first question comes from the line of Josh Jennings with Cowen Your line is open.

Hi, Joe Hi.

Hi, Good afternoon, Mike and Michael Thanks for taking the questions.

But the key hurdle profit healed.

Over a quarter.

So in our P&L.

I wanted to ask about fiscal <unk> guidance fiscal <unk> guidance.

$7 million peripheral revenue versus sequential improvement it sounds like.

What you are seeing to date in August and July.

Why is that.

Seeing disruption from Delta.

Just help us understand what type of headwinds you are seeing in the breast space.

And then particularly with the trends in August.

Thanks for your question Josh.

We are seeing some softening.

<unk>.

In August.

Actually.

In addition to Michael and myself.

We've got Eric <unk>, our Chief commercial officer, as well as Andrew <unk>, Chief Technology Officer with me here.

So that will also be available to answer questions.

For this one.

I'd like to pass it over to Aaron to give you a little bit more color on the revenue growth and our estimate of $7 million for commercial revenue in the first quarter sure Hi, Josh how are you.

So I think what we're seeing and what we've kind of anticipated as there is a certain degree.

Analogy as you move towards the fall that.

We're starting to see.

The August timeframe and that we're anticipating as we move into September.

So I think that is separate from COVID-19 related to the Delta dairy, we're certainly seeing that more so in the.

We're seeing that kind of affect hospitals, the support staff not as much affecting sales yet certain procedures are getting affected but if anything more so delayed than anything else.

But again I think that we'll have to just wait and see how that might pan out, but I think.

It's better than anything it's the seasonality, but I think that we're anticipating more scale.

Great and then just one quick follow up on this topic.

In terms of the business.

Teekay from 2020.

Significantly thoughtful comprehensive availability, but just to be clear you're not seeing any.

Reduction in.

For the data availability, so far with itself as soon as that.

Is that correct.

Yes, that's correct.

Not yet seeing any effect on bed availability.

And we're hoping that we don't going forward.

One quick question on the pipeline.

The trial design optimization.

Sure.

Sure.

Signal.

Feasibility trial or other datasets.

Crude decision.

A decision to optimize.

Are they still under Pfizer limited expansion ratio odds.

And did.

All of those to show those signals of those data sets to the FDA.

So it has been accepted.

Modification and.

The optimism that this is lee.

To go from an efficiency standpoint, and the commercial standpoint, getting that 1% to 20 expense ratio.

Nation.

As you need.

So I'll start off with an answer to that question, Josh and then pass it over to Andy.

Definitely we are.

Solid and selecting the 1% to 20 expansion going forward in the single arm.

The trial design with 23 patients that's powered to 90%.

And we're feeling very comfortable to talk about the data sets that.

<unk>.

That decision.

I'll pass it over to Andy.

Mike Hi, Josh.

We.

I have.

Not relied on the feasibility data with respect to our FDA submission.

But.

And it's early days and in the fees.

Feasibility program.

Any case to date nothing in those data.

Would appear counter to the dis.

That we have made which is it's a strategic decision to sort of consolidate study power into a single arm.

And there are multiple data points feeding into that recent.

Recent publications are showing results strong results at the 1% to 20 in <unk>.

<unk> expansions.

And our own internal development work.

On the bench is showing.

That the fluid volumes associated with <unk>.

Preparation of the 1% to 20.

Dell suspension.

Our optimal.

Higher.

Cell harvesting.

And so it's really those data that we used in our FDA submission to.

Consolidate to a single arm.

Excellent. Thank you take your questions.

Yes.

Thanks, Joe Thank you.

Our next question comes from the line of Matthew O'brien with Piper Sandler Your line is open.

Great. Thanks, so much for taking my question.

I know, there's some softening here in fiscal Q1, as a result of Covid I get that but what I'm really interested in is the sequential improvement you saw in fiscal Q4 and I know.

The fourth quarter and a bigger push among the sales force, but that by my numbers is about a 40% sequential increase on a per surgeon basis versus fiscal Q3. So it seems like the the strategy of going deeper in these existing accounts is really starting to get traction so I.

Im just wondering as we come out of Covid and some of the impacts you're seeing there I mean.

The ability to drive.

Deeper and deeper penetration seems that gets proving out so how quickly can you get back to doing that and then.

Again, the revenue per Doctor that I'm seeing right now in our fiscal Q4 is about $45000 roughly.

<unk>.

Where do you think that 45000 can go over time.

Aaron do you want to take this one Matt.

I think there was a few things that are happening last quarter that just to put in perspective. So first of all the pendulum somewhat swung right. When people are massive locked down and all of a sudden.

People thought their vaccinations, and we're able to go out and live again and because of that the accident the pendulum swung from.

Locked down very little accidents to all of a sudden the accidents and incidents burn really increased exponentially. So I would say that.

Our sales driven.

And by two in two parts, one part with accidents.

Normally high accidents, unlike I have ever seen an increase before so and that was due to the desire for people to get out and live again, because they've been cooped up.

It was also driven by the sales team was ready and able to go where they were able.

Able to start meeting with accounts live they were able to have live events that are much more impactful than virtual events, we started having offsite training events he started having.

Off site engagement and.

Live engagement, that's much more impactful.

But you are right so we deepen penetration.

But there was just a lot more cases at burns actual incidents that firms with much higher so it was those.

Those two things together, so I think the incident the burnt the pendulum coming back down as I mentioned kind of the sea.

Analogy of the incidents of Burns is coming back down.

<unk> seen some tightening of restrictions due to delta.

There Ain't coming back into play as well.

We are seeing kind of discussions of the fall Burns meeting pointing back to virtual.

We are now we've got one more live meeting planned, but the rest of our lives meetings that we had planned for the fall and we're putting on pause until we see what happens kind of with the delta variance. So.

There's a few unknown variables that are going to play out here, but I think youre absolutely right. I mean, we were very successful moving the needle in terms of penetrating with accounts, but there was a lot more variables to play there.

And so it's a.

Is that I think there is many more dynamics to kind.

Kind of look at.

If that helps okay.

Yes, maybe just to put it it's very helpful. Just to put a finer point on that Erinn.

I'm really curious about is when they are reaching for resell versus doing a traditional skin grafts.

I know there it seems like the volume was strong year is there any way to kind of parse out volume versus just your market.

Sure, taking where people are saying you know what I'm not going to do traditional grafting I'm going to use resale instead.

Yes, and that's the tough part about it right because we the MBR data that we get from the aviation for the year, we don't get that until a year. Later, we are starting to just track skin grafting data, but we get that at a six month delay.

Right. So what we're getting is just kind of AD hoc feedback from the sites.

Increase.

Increase in admissions.

Don't have hardcore data in terms of what the exact number of procedures are for the quarter and what our tax rate was in terms of the exact resale eligible for you to show what you wanted the market share capture.

Eligible procedures right.

That data is challenging.

Okay, Okay, and it certainly seems like it's going the right direction now so thanks.

Thanks for that and then.

The follow up to my two questions first question, but keep our first question.

And Josh as point on the single arm a bit of Lego.

I'm just wondering 90 patients they noticed by year end, you had said that before for the other study design going down to a single arm, though can't you crunch the data faster isn't the cost of the trial is going to be a little bit lower as a result of this and then is there any risk that.

That is not viewed as a more robust clinical study because it.

Multi arm in the eyes of clinicians once you do get the approval.

So let me again start out with a response here and then pass it over to Andy to add some color to it but.

We've got 23 patients that will be enrolled in the pivotal trial.

Each site.

Need to do a run inpatient as Andy previously mentioned.

Basically it's a practice patient to make sure that they've got the procedure down right.

And.

We don't feel that we're losing anything.

Bye.

Studying.

The one to five one to 10 concentrations.

Because it's not a linear.

Basically rollout.

Availability of skin cells.

Relative to diluent, when we look at the suspense.

Pension and Thats, what Andy is talking about when the speaks about the laboratory results that his group has uncovered in.

In the meantime.

So there seems to be a greater efficiency.

We're at a 1% to 20% with that fluid volume and the cellular suspension.

So we feel very confident also.

<unk> publications coming out.

With 1% to 21 to 40.

And getting good results with those patients.

And I'll pass it over to Andy now if you want to add any color.

Correct.

Trial.

While design is more cost effective for us.

And just to put it in what Mike is saying the.

Our data don't predict a difference between the one to 10, one to five 1% to 20.

So.

That was really what underpinned our decision.

Does that answer your question Matt.

Perfect. Thanks, so much.

Right.

Our next question comes from the line of Lyanne Harrison with Bank of America. Your line is open.

Hi, Mike Hi, Michael.

And then come back to the top 20 accounts obviously.

Great to see that a boarder base of accounts and with a top 20 now holding 40%.

Think of that rising cases in the United States can you give us a sense.

How many of those top 20 accounts.

Right.

Okay.

In the Delta.

Yes.

Aaron are you able to answer that yeah well.

I would say that.

Gosh, a good chunk I mean.

Many of our largest accounts are in the top 20, so yeah, I mean, I can if I look at the numbers.

Oh gosh almost half of them are in the top 20 are in the areas that are affected with the delta in terms of the actual proportionately. The makeup the total sales of the top 20 accounts.

It makes sense okay.

Okay.

As you can tell today.

<unk> change.

<unk>.

For those particular accounts.

So there are changes in access, but we're still able to get it right. So for example, when I say that Theres no what we call plus one you can't bring anybody with you.

Are able to get in to support a case to do a training to be therefore.

For the aftercare.

You are now for some hospitals required to have to be vaccinated.

There are kind of more strict requirements to get in.

But we are still able to get in the other issue that is that.

Many of the staff are out with Covid in many of the nurses are out with Covid.

So we are actually required to be in more often to help support cases or to train. So if anything we've seen some cases get delayed because of that but we haven't to my knowledge actually lost the case because of that quite yet.

Okay. Thank you and if I could follow up.

With the approval for resale for Pds.

Sure.

Okay.

Can you give us an indication of what kind of traction you're getting with the pediatric hospitals today.

So.

I'll start off and pass it over to Aaron.

We are getting traction and there is a specific PD.

After a campaign for pediatric only facilities.

A good example is UC Davis.

They are one of the top accounts and they've got their major hospital across the street, they've got the Shriners hospital for children only.

Only.

And they signed on with us partially because of that expanded label with pediatrics.

So that's just an example, there so we are getting additional traction and I'll pass it onto errand for any additional color, yes, so theres not a lot of.

Pediatric.

Only burns hospitals in the United States.

And so those that are are the ones that we're now working with to try and get what we call back approval or hospital administration approval.

So many of those hospitals are in that process right now typically that process can take.

Six months, sometimes longer to kind of get through that so we haven't had.

We haven't had our approval for very long. So we're just kind of getting through that process and thats part with most of those accounts, but.

The level has certainly been very very helpful getting approval and also now accessing those conversations and starting the process.

Off and those pediatric only account.

And also it's been helpful getting access into other accounts just to have new conversation because that also is another excuse to get into hospitals is considered.

It is considered a new product or new news.

It does allow us entry into the hospital.

To talk about the new data that we have and the new label.

Okay, great. Thank you very much.

Thanks Liana. Thank you.

As a reminder, ladies and gentlemen that star one to ask the question.

Our next question comes from the line of Ryan Zimmerman with BT I E.

Your line is open.

Hey, Thanks for taking my questions. It's great to see all the progress just I'll ask my two questions upfront and kind of a follow up to Matt's question.

For you Aaron.

I know, we're talking about all these utilization dynamics.

What are you potentially displacing.

Whether it's congrats.

Grafting or other products.

All of these cases I'd love to understand.

What you could be also replacing beyond skin grafting and then the second question and Mike I know.

Agnostic on hamsters firms, but if you read the comments.

Yes, there was a discussion around.

To resell itself as a device and how they're thinking about it and so I'd love just your latest thoughts on.

No.

What you think or what are your interactions with agency CMS has been around this and kind of where your head's at in terms of getting that pass through label. Thanks for taking the questions.

Sure.

Why don't I, let Aaron answer the first question about.

What are we displacing beyond skin grafts, so I'll take the second one on our pass through payment. So just to be clear our targeted skin grafting skin grafting as the standard of care skin grafting is where are the volumes at the only other product.

Ryan episodes, the only other products in the market and the volumes with episodes are still though their price point is very very high but when you actually look at what that equates to in terms of procedural volume is very very low and that's not that's not meaningful for us in terms of volume says that's not our target our targeted skin grafts and.

The time that you may require a skin graft consider resell and essentially TBS phase or total body surface area to 5% and higher is it pretty much our sweet spot.

Time, you could require a skin graft. So so it's really it's changing the standard of care at the total paradigm total.

Total paradigm shift.

That's what we're focusing on.

Okay.

And I'll just follow up on the pass through payment for outpatients and you are correct that CMS.

In the Federal Register.

Said that we basically Chuck.

All of the boxes.

But they are uncertain, we are or should be classified as a device of course, we do have a PMA approved which is a device. We do have device breakthrough designation.

And the FDA.

As a fully regulated us as a device.

And there is also a change of staff that has gone on at CMS and what I believe is that it's really a reeducation.

Program, our process that we need to go through.

With.

The change of staff to get them up to speed.

And have them really understand the details of what's been going on and of course during the open comment period.

CMS is not going to.

Provide any additional comment.

Commentary on it.

But we remain confident that this will come through with that being they're only.

<unk>.

Aaron I don't know if the reimbursement group reports to you, but anything to add I think I think you've covered it I mean, hopefully we'll typically they will publish.

The final rule in November last year with a little bit later in December, but hopefully, we'll all know by year end.

We are optimistic.

I think we were surprised on that feedback given everything that you think will have to wait and see.

Okay. Appreciate the color. Thank you guys. Congrats on all the progress this quarter.

Thank you Brian.

Thank you.

Our next question comes from the line of John Hester with Bell Potter Your line is open.

Good afternoon, everyone and thank you for your time today.

So if you could just expand on your comments about the Japan market its lending fairly close now actually you said like 'twenty one.

<unk>.

Approval is presumably if we launch in calendar year 'twenty. Two can you just run through the coupons on your commercial arrangements.

Please.

Sure.

And so it might be some full year volume comments sorry.

Sure why don't I start off and then.

Maybe.

Maybe pass it to Michael holder for some additional color commentary if he has any.

But.

Our.

Arrangement with cosmetic.

Our partner in Japan.

Is that it's approximately a 50% revenue share.

And.

You've heard of the progress there's a GCB audit that has begun no findings to date Theres also some planned discussions with the Ministry of health Labor and welfare on reimbursement, which are all very positive comment commentary relative to.

Two the approval coming up.

Calendar year end, which we have not changed our guidance on and we still do anticipate that and we do anticipate a launch in 2022.

And so far as the volumes and how much will sell or cosmic tech will.

Sell rather.

It's hard to say until we actually get the label from PMT a because.

Cosmo Tech with us in collaboration we have applied for a very broad label to include Burns and we're confident of getting the indication of burns.

But it also include soft tissue. It also includes that ally go that also includes potentially chronic <unk>.

So dependent upon what indications are actually approved by the P. M D E and given reimbursement by the MH O W.

Well.

We'll determine the volumes and then the revenue that's going to be coming to us.

That.

Answer your question John.

Thank you. Thank you Mark just detail just as a follow up.

Just as a follow up Mark what do you believe is the.

Mark.

Market in Japan for a bit longer in terms of how many stable patients gives us $1.3 million in the assembly.

Any idea of what that could be in Japan.

Generally it's 10% is.

Rule of thumb.

But let me pass it over to Aaron to.

I'll give you more.

Detail, but she may have yeah. So.

China, and Japan have a little bit.

Sure.

China, Japan, and the U S are kind of the highest nation for vitiligo. There is about 2 million patients that suffer from vitiligo. If you use the same proportions that we have in the U S for stable.

Just over half a million that are.

Stable vitiligo.

Okay.

And Mark just finally, you also talked about other geographic expansion is anything happening beyond Japan at this point.

At this point no we're really waiting for additional <unk>.

Shouldn't approvals.

And when it does.

Be more specific once we got soft tissue in vitiligo.

Approved in the United States, then we will have the.

Necessary ROI that we need to go into each country.

Europe.

<unk> got a sales force going negotiate reimbursement.

Do our economic models.

And.

It really get into.

Europe as well as back into Australia.

Excellent. Thank you.

Pleasure John.

I'm not showing any further questions in the queue.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation you may now disconnect.